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Prem Kumar (business development)     16 April 2010

employment agreement / secrecy agreement


I Prem Kumar employed in XYZ Organization as Franchise Manager and wsih to quit my job. I have signed an agreement with my incumbent company and the key highlight of the agreement is:

1.      I joined the company on 1st Feb 2010.

2.       My Employment Application Form was filled on 2nd Feb 2010.

3.      I received my offer letter cum acceptance of appointment on 4th Feb.

4.      I received a SECRECY AGREEMENT document of 3 pages of which 1st and 2ND page was on Rs 50 stamp paper each.

5.      The company had not conveyed about the secrecy agreement during any part of the interview nor after appointment nor in offer letter received on 4th Feb 2010.

6.      On 8th Feb I was given the Secrecy Agreement and it was surprise to me. I signed out of fear that if I don’t sign they may not employ me and terminate my appointment. So I signed the agreement on 13th Feb 2010.


The key features of the SECRECY AGREEMENT are:


1.      The Agreement is named Secrecy Agreement.

2.     The company has been incorporated under company’s act 1956 having its registered office in Delhi.

3.     The Stamp paper was purchased from Harayana.

4.      I have to continue for a minimum period of 1 year.

5.      I have to maintain trade secrets etc and that I cannot join a company into similar business as my current company.Surprisngly there was no trade secrets thay shared with me as they kept all secrets secrets only and further I am not allowed to interact with any staff 

6.      In the event intend to leave, resign or abandon the service during the 1 year, I will have to pay as liquidated damages an amount equivalent to the remainder months salary that the company would have paid me had I continued.

7.      Additionally I would have to reimburse any amount that the company would have spent on my training

8.      I did not receive any training from the company nor has the company spent anything on my skill development.

9.      All collaterals prepared by me were purely on the basis of my knowledge.

10.  I joined on 1st Feb 2010 and IF I resign I am willing to forgo my current month’s salary at the most.

11.  In case of dispute refer to Section 7 of Arbitration Act failing which the dispute shall be referred to HIGH COURT of Delhi.

12.  The agreement also says that the agreement is made in delhi and the jurisdiction shall be courts of Delhi.

13.  My office is based in Gurgaon and the secrecy agreement was signed in Gurgaon.

The company hasnt made any invetsment on my training

14.  As on 16th Feb the other party or the employer has not signed the agreement and it has only my signature dated 13th Feb 2010.


In view of the above circumstances, I seek an opinion if the SECRECY AGREEMNT is legally enforceable and will I have to cough up the amount to the company as mentioned in the agreement


After joining I found that my profile was not as per my expectation and I hardly had any work with me. I a day I had on one hour work. During the initial weeks I helped developed documents related to my work i.e agreements financials etc. I felt that they were not utilizing my skill properly and this way if I continue I will ruin my career.I have received a good job offer and intend to take up at the same salary as i am drawing now


 4 Replies

Vinod kashyap (Advocate & Legal advisor)     16 April 2010

As you ahve worked only 2 month u can compensate company by giving 2 month salary as compensation as per condt. no.2. just settled matter amicably. 

Manish Singh (Advocate)     16 April 2010

you dont need to fear of anything. just go on and join the new company. let them approach the court of law iif they wish since they are going to come back empty handed as this has been a settled principle of law that you shall not be liable for any compensation if they have  not incurred any training expenses upon you.

also, you can take similar employment :



Pepsi Foods Ltd. And Others vs Bharat Coca-Cola Holdings Pvt 1999 VAD Delhi 93

"Admittedly in the service and employment contracts of the plaintiffs, there is a negative covenant clause, restraining an employee from engaging or undertaking employment for 12 months after he has left the plaintiffs' service. It is well settled that such post termination restraint, under Indian Law, is in violation of Section 27 of the Contract Act. Such contracts are unenforceable, void and against the public policy. What is prohibited by law cannot be permitted by Court's injunction."

Gagan Gupta (Advocate)     26 September 2011

agreed with Mr Manish Singh

Kumar Doab (FIN)     26 September 2011

You must be having the copy of your joining report dated 1st Feb 2010, Employment Application Form dated 2nd Feb 2010, offer letter cum acceptance of appointment dated 4th Feb, Secrecy Agreement dated............not mentioned received on 8th Feb,2010 and signed on 13th Feb 2010 .Since it is till date not signed by other party. It is better to destroy this doc and relax. This document was put before after you quit previous employment and joined this employment thus leaving no option but to feel the pressure of it under the fear of losing employment and affecting your resume.

You should have submitted your humble dissent in writing.

After the offer letter in which brief detail of position offered is mentioned, is accepted, appointment letter with detailed terms of employment is issued. Did you receive appointment letter?

Clause no. 6 is unfair. Clause number 7 is not applicable since you have not received any training.

Company should in a fair manner announce in writing the training to be conducted, the purpose, schedule, intent, and cost if it want the employee to make a proper note of the costs involved. Employee is with in his rights to give his concurrence.

Employee should declare on all projects, plans, strategies conceived, developed, finalized by him that this plan, presentation is conceived and developed by ..................and in case of such employers can mention that it is his property and prior permission is required.

Some employers want everything for free from employee while they may frame such agreements that employee may feel like that he is being charged for even breathing.  

Kindly complete all task on hand and obtain a written communication from your reporting authority/superior official that tasks are completed by you, and submit the company property under acknowledgment and obtain comments e.g. nothing is pending to be submitted. This should suffice as NOC/NDC. Do not give any opportunity to the company to charge you for causing any loss.

Submit proper notice of resignation and mention effective date of resignation, and request the company to make necessary arrangements to relieve you with in this date and that you shall cooperate to train your replacement and hand over the charge with in this date.

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